TaxTMI 
TaxTMI 
2002 (8) TMI 197
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....s were confiscated under Rules 173Q and released on payment of redemption fine of Rs. 4.4 lakhs, bank guarantee of Rs. 3.62 lakhs have been encashed and appropriated towards the redemption fine of confiscated goods. Plant and machinery have also been directed to be confiscated in respect of Meera Industries and Rama Industries under Rule 173Q and 209 of CE Rules. However, granting the appellant to redeem the same on payment of fine of Rs. 1 lakh. The allegation against the appellant is that they are manufacturers of the products of pressure pans, pressure cookers registered with the Central Excise department and were availing the benefit of SSI exemption under the said notification. They were fixing brand name "SEETHA". The firm comprised of partners of Mr. K.R. Balachandran and Mrs. B. Kousika w/o of Mr. K.R. Balachandran. 2.M/s. Rama Industries, another firm, which according to the appellant is an independent firm with separate constituents of partners comprising of Mr. K.R. Babu and Mrs. B. Nithya, w/o. Mr. K.R. Babu registered with the Central Excise department and manufacturing pans, pressure cookers with brand name of "RAMA" and availing benefit under SSI notification. ....
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..... 6.As the products Pressure Cookers and LPG stoves are products falling under Section 4A for determination of value in terms of Notifications 18/98 C.E. (N.T.) dated 2-6-98 and 20/99 C.E. (N.T.) dated 28-2-99 an addendum dated 17-2-2001 to the Show Cause Notice dated 12-6-2000 was served on the Noticees on 7-3-2001 demanding a differential duty of Rs. 2,86,156/- arisen due to the valuation to be made under Section 4A. 7.The facts of the case are set out in detail in the two show cause notices and it will be superfluous to repeat them all over again. However, the facts and allegations of the two show cause notices, in brief are as follows :- (i) On a thorough search conducted at the premises of Meera Industries on 1-7-1999 and 3-7-1999, it was found that no Central Excise records were available in the factory for verification; (ii) It was informed that another company name, Rama Industries was also manufacturing excisable goods within the said premises; (iii) the stock of excisable goods valued at Rs. 5,09,670/- available could not be correlat....
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....ubes, Casseroles, Cookers, etc., from both Rama Industries and Meera Industries; (xi) In his statement dated 18-8-99 Shri S.A. Hussain, Accounts Manager, M/s. Associated Marketing, has stated that M/s. Rama Home Needs (P) Ltd., Chennai have supplied them Aluminium Pressure cookers, LPG Stoves with Rama brand; that M/s. Rama Home Needs P. Ltd. have supplied Aluminium Pressure pan but have billed them as Aluminium Frying Pan and lid for frying pan, that M/s. Associated Marketing Agencies sold the same as 'Pressure Pan'; that at no point of time they sold the frying pan and lid separately and that they were the distributors of M/s. Rama Home Needs P. Ltd.; and has stated further in his letter dated 19-8-99 that the Frying pan and lid had come in a single carton; (xii) Dealers from various places have also stated that they have received 'Seetha' brand LPG stoves from Rama Industries; that, 'Rama' range of products from both Meera Industries and Rama Industries; (xiii) The registers/documents requested from Seetha Industries were submitted by them in piecemeal and that too mostly in ....
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....sp; that Meera Industries are engaged in the manufacture of only Pressure Cooker and Frying Pan under the brand name of "Rama" and "Sheetha"; (ii) that the brand name of "Seetha" is registered in the name of Meera Industries while the brand name 'Rama' is not registered, use of brand name 'Rama' was started only from 1998; (iii) that Rama Industries is another registered partnership firm and LPG Stoves are manufactured by them with the brand name 'Rama'; (iv) that Rama Industries is functioning at the same portion of No. 146, East Coast Road, Injambakkam, Chennai - 600 041 which property belonged to Meera Industries who have given it on rent to Rama Industries; (v) that the allegation that Meera Industries is engaged in the manufacture of all items is factually wrong and established by the following. Sl. No. M/s. Meera Industries M/s. Rama Industries 1. Exist in their own premises Exist in leased premises for which rent has been paid 2. Separate Electricity ....
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....- 1999 (108) E.L.T. 138 (Tri.); (h) Indian Metal Industries v. Commissioner of Central Excise, Bhubaneshwar - 1999 (108) E.L.T. 593 (Tri.); (i) Vir Industries v. Collector of Central Excise, Bombay I - 1999 (109) E.L.T. 322 (Tri.); (j) Vasavi Industries v. Collector of Central Excise, Hyderabad - 1999 (109) E.L.T. 908 (Tri.). (vii) that as product range, partner, premises, electricity, excise registration, ST, IT, Factories Act, PF, ESI are different clubbing the value of clearances of both the units is legally not sustainable and therefore the proposal contemplated to confiscate the goods of both the companies are ultra vires the provisions of law. (viii) that LPG Stoves are manufactured by Rama Industries under the name of 'Rama' whereas Pressure Cookers and Frying Pans are manufactured by Meera Industries under the brand names 'Rama' and 'Seetha'. On the brand name issue they cited the following further case laws. (a) Collect....
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....nd Rama Industries are totally different; (iii) that the Officers failed to understand that there existed a rental agreement between the two companies; (iv) that there are correspondences with the two Companies by the Department during earlier years and from that it could be seen that the Units were individually existing and had been frequently visited, inspected and controlled by various statutory authorities; (v) that following further case laws support their contention against clubbing of value of clearances. (a) Accurate Engg. Co. Private Ltd. v. CCE, Pune - 1999 (112) E.L.T. 679 (Tri.); (b) CCE, Rajkot v. Amar Plast Industries - 2000 (115) E.L.T. 482 (Tri.); (c) Chemguard Coatings Private Ltd. v. CCE, Chennai - 2000 (116) E.L.T. 43 (Tri.); (d) Deep Jyote Paints Industries v. CCE, Bombay - 2000 (117) E.L.T. 223 (Tri.); (e) Jalla Industr....
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....ed and that the financial accommodation between the two firms is well established and that the case is not one of production made by Rama Industries to be clubbed with that of Meera Industries. He has held that the Department has not taken the case of clubbing of two separate units clearances and on this ground he has distinguished large number of judgments cited before him. He has held that financial flow back between Meera Industries and Rama Industries is proved and the SSI exemption notification specifically bars use of other brand name while availing duty exemption. (f) In para 17 of the order the Commissioner has also noted that it is an admitted fact that the brand name of 'Seetha' belong to Meera Industries and the brand name of "Rama" belong to Rama Industries. He has held that the activity of manufacture of all goods in effect was done by Meera Industries and all the goods whether it bore the brand name 'Seetha' or 'Rama' were in fact manufactured by Meera Industries only. Therefore the effect of this fact is that Meera Industries manufactured excisable goods bearing the brand name of another firm and as such the benefit ....
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....ies and has also confiscated the plant and machinery and granted redemption on payment of fine. 11.We have heard ld. Counsel Shri P.S. Raman, Adv. for the appellants and Shri A. Jayachandran, DR, for the respondent. 12.Ld. Counsel produced enormous evidence furnished in the paper book. He pointed out that both the units had registered with the department including separate registration, declaration and RT 12 returns from time to time. He also pointed out that Rama Industries was in existence from 1990 onwards and were paying duty and also filing income-tax and sales tax returns. They were having separate balance sheets and there was no flow back of funds. The statement given by the buyers could not lead to a conclusion that there was flow back or mis-utilization of brand names either of them. He contended very strongly that the department has failed to issue show cause notice to Rama Industries and without notices to Rama Industries their clearances cannot be clubbed with the clearances of Meera Industries. It is his contention that it is a well settled law that when the department wants to hold the other unit as a dummy unit or to hold that the said unit is on paper or that ....
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....a (Mixie Parts), turn over details for the financial year 1989-90. The Rama Industries by their letter dated 3-9-90 furnished all the details which has been received by Inspector of Central Excise. Madras III Division. The Assistant Collector of Central Excise, Madras III Division by his letter dated 8-8-91 to Rama Industries and 3 other separate units called upon them to report to him and explain the reasons for not filing the declaration for the financial year 1991. In response to the said letter Rama Industries filed the declaration on 4-7-91 which has been acknowledged by the Assistant Collector on 9-7-91. Certificate of registration dated 7-11-94 issued by Superintendent of Central Excise, Range III 'C' Madras - III Division to Rama Industries have also been produced showing the details of items manufactured by them. A separate certificate issued by the Department of Industries and Commerce registering both the units as SSI Units have also been produced. Form A.R. 4 for export under QBAL and application for removal of excisable goods for export by Meera Industries and Rama Industries which has been attested by the Superintendent of Central Excise, Range III has also been produ....